Mortgage Rates Show an Upward Trend, But will Wednesday ECB Meeting Influence the Market?
The economic data that was released this week was the primary factor that affected the mortgage rates. However, the data portrayed a stronger than expected outlook on manufacturing, wages, and services that led to a slight increase in mortgage rates. The employed report released on Friday indicated that a substantial number of investors had shifted their focus on the stronger than expected wage growth. For instance, the average hourly earnings hit a high of 2.9% which was a significant increase compared to the 2.8% that was reported in July. In fact, this was an all-time high from April 2009. The data remained negative for mortgage rates since stronger wage gains always raise an outlook for future inflation.
Beyond the surprise of the economic data, the other components of the critical report remained neutral. More job opportunities were created in August compared to July while the unemployment rate stagnated at 3.9% matching the investors’ expectations. The earliest valuable economic data released every month usually comes from the Institute of Supply Management which also offers credible reports on activity in the manufacturing and service industry. Both sectors performed well in August and investors are hoping for the best in the subsequent monthly reports.
The ISM’s national manufacturing index rose up to 61.3 which is the highest figure that has been reported since May 2004. It is also the second highest figure to be reported in history. Similarly, the ISM’s national services index moved up to 58.5 indicating a significant expansion in services. These strong reports were a major catalyst in the rising of the mortgage rates.
What Does the Future Hold?
Looking ahead, the JOLTS report that mainly focuses on labor turnover rates and job openings will be released on Wednesday next week. The Feds depend on this data to help them get a clear view of the labor market in the country. The Consumer Price Index is expected to be out on Thursday while the Retail sales report will be out on Friday. All these reports are critical since they focus on consumer spending which accounts for slightly over 70% of all the economic activity in the country. The retail sales data is also a crucial indicator of economic growth. The European Central bank meeting scheduled to take place on Thursday next week could also affect the mortgage rates. Call Core Mortgage FInancial today and discuss your best mortgage options, we guarantee to lock in your interest rate with the best possible terms.